Central banks are losing political capital

Faith in central banks may be running out. The near-collapse of the global banking system undermined one of the main reasons for central banks to exist. They are now failing in another - the avoidance of price stagnation or deflation.

Faith in central banks may be running out. The near-collapse of the global banking system undermined one of the main reasons for central banks to exist. They are now failing in another - the avoidance of price stagnation or deflation.

There was an intriguing sign of how patience is running out in the proceedings of the European Parliament two weeks ago. The European Central Bank is famously independent - infamously independent in the view of some who complain about its being accountable to no-one.

I have never quite been clear about the distinction between independence and accountability.

They look more like contradictions of each other. Certainly it is a fine line between them. The Oireachtas learnt that independence, according to the ECB, means it does not give an account of itself to national parliaments and the only formal accountability is its reporting to the European body.

Two weeks ago, the parliament delivered its verdict on the ECB's annual report for 2015. According to some MEPs, the degree of criticism of ECB policies was unprecedented, but you would have to take their word for it.

Poor, benighted Europe. The verdict, in the form of an agreed motion, is unintelligible to all but a parliamentary draftsperson. Even though this is one of the parliament's most important tasks, its website lists a film award as the main story of the week.

Summoning the will to live, I waded through the unprecedented critique. It does indeed point out the weaknesses and dangers in the ECB's "quantitative easing" - creating cash to buy loans (many of them loans to governments) from banks.

It's not easy being a central banker these days. Sympathy is limited, since it is a mess of their making, which has fallen to them to clear up. Insofar as sympathy may be warranted, it is because what they are trying to do may not be possible. At least not without help.